What is a Consumer Proposal?

A consumer proposal is a legally binding arrangement filed with a Licensed Insolvency Trustee to settle your debts for less than you owe. You negotiate a debt repayment plan with your creditors over a period of up to 5 years in exchange for which you keep your assets.

When you file a debt proposal through an LIT, acting as a consumer proposal administrator, you immediately receive legal protection from your creditors under the Bankruptcy and Insolvency Act.

As a proactive solution, a consumer proposal will:

  • Reduce your debts by up to 70%
  • Consolidate your debts into one, affordable, monthly payment
  • Freeze interest on your debts
  • Stop collection calls and wage garnishments

Will I qualify for a Consumer Proposal?

The best way to determine if a consumer proposal is the right path forward for you is to have a free confidential consultation with a Licensed Insolvency Trustee.

As a federally regulated program, proposals have specific requirements you must meet. To be eligible to file a consumer proposal in Ontario:

  • You must be able to afford to pay a portion of your debts
  • Your debts must be greater than the value of what you own
  • Your unsecured debt must not exceed $250,000 (not including your mortgage)
  • You must be able to make monthly payments, or one lump sum payment

Most unsecured debts can be eliminated by a consumer proposal.

Who should file a consumer proposal? A consumer credit proposal is considered the #1 alternative to filing bankruptcy.  A debt proposal makes sense if:

  • You need relief from unsecured debts
  • You have assets you wish to keep that would be surrendered in a bankruptcy
  • Your income is high enough that you would be required to make high monthly surplus income payments if you declared bankruptcy
  • You have an honest desire to repay as much as you can afford
  • You want to avoid bankruptcy
  • You work in a profession that requires you to disclose if you have gone bankrupt.

What does a Consumer Proposal cost?

If you have more debt than you can handle, a consumer proposal is usually the lowest cost debt relief option.

Even if you qualify for a debt consolidation loan, you will be repaying all your debts, in full, plus interest. In a debt management plan, you still must repay the full amount of the debt you owe.

A consumer proposal allows you to settle your debt for less than you owe. Your payments are based on a negotiation between what your creditors expect to receive and what you can afford to repay. In most cases, this results in a payment that is much lower than any other debt relief solution.


To compare possible payments in a consumer proposal with other options, try our consumer proposal calculator.

Contact us for a free estimate of what your consumer proposal payments might be based on your individual debts and financial situation.

Where do I get a Consumer Proposal?

In Canada, a consumer proposal can only be filed with a Licensed Insolvency Trustee.

Credit counsellors and unlicensed debt consultants cannot legally provide consumer proposal services. All they can do is refer you to a trustee licensed by the federal government like Hoyes, Michalos. You do not need a referral to an LIT (formerly called a bankruptcy trustee) and you should never have to pay an outside consultant to help you prepare any paperwork.

As a Licensed Insolvency Trustee, Hoyes Michalos is licensed to file consumer proposals in Ontario.

  • All consultations with our licensed experts are free.
  • We will meet with you as often as you need.
  • We’ll find a solution you can afford.
  • We have a 99% acceptance rate for consumer proposals we file.

Ready to talk to us about your options?

Book a free consultation today